What You Should Know:
– The pharmaceutical research and development (R&D) sector is experiencing a significant upswing, with projected returns on investment climbing to 5.9% in 2024, according to a new report by Deloitte.
– This surge, building on 2023’s 4.1%, is largely attributed to the success of GLP-1 therapies, showcasing the lucrative potential of addressing substantial unmet medical needs. However, this positive trend is juxtaposed with rising drug development costs and extended clinical trial timelines.
Report Background/Methodology
Deloitte’s 15th annual report, “Measuring the return from pharmaceutical innovation 2024” report provides insights into the biopharmaceutical industry’s performance, analyzing 20 leading global pharmaceutical companies using consistent methodology. This annual report, led by the Deloitte UK Centre for Health Solutions, tracks the projected return on investment from late-stage pipelines.
GLP-1 Therapies: A Major Catalyst
GLP-1 therapies, widely recognized for their efficacy in diabetes and obesity management, have significantly influenced this year’s returns. If these therapies were excluded from the analysis, the average projected return would plummet to 3.8%, underscoring their substantial market impact. This success story illustrates the potential for companies to achieve robust financial returns by focusing on areas with significant unmet medical needs, such as Alzheimer’s and stroke prevention.
Rising Costs and Lengthening Timelines
Despite the positive returns, the report highlights persistent challenges. The average cost of developing a drug has escalated to $2.23 billion, driven by investments in new technologies, complex clinical trials, economic factors, and late-stage attrition. Additionally, Phase III clinical trial cycle times have increased by 12%, extending the average time from Phase I through regulatory filing to over 100 months.
“The upward trend in pharmaceutical R&D returns indicates a positive sign for the industry, and the influence of several pronounced asset classes suggests that there is still substantial value in addressing unmet patient need. Identifying the next wave of breakthrough innovation that will have life-changing impact on patients is likely to remain a key challenge to driving sustainable pipeline flow,” said Kevin Dondarski, Life Sciences R&D strategy leader, and principal, Deloitte Consulting LLP.
